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Balance Sheet (balance + sheet)
Terms modified by Balance Sheet Selected AbstractsSources of Bank Interest Rate RiskFINANCIAL REVIEW, Issue 3 2002Donald R. Fraser We investigate bank stocks'sensitivity to changes in interest rates and the factors affecting this sensitivity. We focus on whether the exposure of commercial banks to interest rate risk is conditioned on certain balance sheet and income statement ratios. We find a significantly negative relation between bank stock returns and changes in interest rates over the period 1991,1996. We also find that bank characteristics measured from basic financial statement information explain bank stocks'sensitivity to interest rate changes. These results suggest that bank managers, analysts, and regulators can use this information to assess the relative risk exposure of banks. [source] Transgenic fish: an evaluation of benefits and risksFISH AND FISHERIES, Issue 2 2000N. Maclean Transgenic fish have many potential applications in aquaculture, but also raise concerns regarding the possible deleterious effects of escaped or released transgenic fish on natural ecosystems. In this review the potential applications of transgenic fish are considered, the probable benefits reviewed, the possible risks to the environment identified and the measures which might be taken to minimize these risks are evaluated. Growth trials of transgenic fish have already been carried out in outdoor facilities and some of these are discussed in the light of possible risks and benefits. Regarding the hazards associated with release or escape, whilst there is some evidence to suggest that transgenic fish may be less fit compared to their wild counterparts, there is insufficient evidence to say that this will be true in all cases. Using mathematical models, we have attempted to predict the magnitude of the genetic effects in a range of different scenarios. A number of possible containment techniques are considered, amongst which containment by sterility is probably the most promising. This can be engineered either by triploidy or by transgenic methods. The conclusions include a tabulated balance sheet of likely benefits and risks, with appropriate weighting. [source] Indulgences at Norwich cathedral priory in the later middle ages: popular piety in the balance sheet*HISTORICAL RESEARCH, Issue 191 2003R. N. Swanson Indulgences were a vital element in late medieval English religion, but evidence of their attractiveness is limited. Material from the sacrists' rolls of Norwich cathedral priory offers information to cast light on their local appeal, changing over time yet open to manipulation and exploitation. Records of offerings at shrines and images within the cathedral also provide comparative figures to set the scale of indulgence receipts in perspective. [source] Fair Trade Community CaféACCOUNTING PERSPECTIVES, Issue 2 2010KAREN LIGHTSTONE capitaux propres; erreurs comptables; petite entreprise; rentabilité Abstract This case concerns the real operations of a café in a small town in Nova Scotia, Canada. It is a second location of a theme restaurant, with the first location successfully operating for a number of years. The owner of the first location, and senior partner of the second café, is available for advice but does not participate in the day-to-day operations of the second location; there are two junior partners who run the business. The focus is on the financial statements generated by an external bookkeeping service. The income statement reports a significant loss, and some of the accounts on the balance sheet and income statement do not make sense for this type of business. Simple ratio and variance analysis provides information for students to determine where problems lie. The case presents a good opportunity for students who have a basic understanding of financial statements to read a set of real statements generated by a bookkeeping service. Not all transactions are logical for a small café, although the financial information is from a real café in operation. The case also contains industry information on the operations of small food and drinking businesses located in Nova Scotia. Fair Trade Community Café Résumé Le cas exposé par l'auteure a trait à l'exploitation d'un véritable café situé dans une petite ville de Nouvelle-Écosse, au Canada. Il s'agit du second établissement d'un restaurant à thème dont le premier établissement exerce ses activités avec succès depuis plusieurs années. Le propriétaire du premier établissement, et associé majoritaire du second, est disposéà prodiguer des conseils mais ne participe pas à l'exploitation quotidienne du second café, que dirigent deux associés minoritaires. Le cas porte sur les états financiers produits par un service externe de tenue des comptes. Le compte de résultat fait état d'une perte importante, et certains des comptes du bilan et des postes du compte de résultat ne conviennent pas à ce type d'entreprise. Une simple analyse des ratios et des écarts fournit de l'information permettant aux étudiants de diagnostiquer les problèmes qui se posent. Le cas offre aux étudiants possédant une connaissance de base de la façon dont les états financiers sont établis une excellente occasion de lire un jeu d'états financiers véritables, produits par un service de tenue des comptes. Toutes les opérations ne sont pas logiquement celles d'un petit café, bien que les données financières proviennent d'un établissement authentique. Le cas contient également des informations sectorielles sur les activités de petites entreprises du secteur de l'alimentation établies en Nouvelle-Écosse. [source] The Many Challenges of Pension AccountingACCOUNTING PERSPECTIVES, Issue 2 2009Thomas H. Beechy ABSTRACT Accounting for defined benefit pension plans has long been a major issue in accounting. Standard-setters are grappling with revisions to pension accounting standards, and much change has already occurred in the United Kingdom. This paper identifies and discusses most of the major issues that standard-setters must confront in developing new approaches to financial reporting for pensions. Key issues concern how to report the impact of changes in assumptions, how to recognize pension costs on the balance sheet and income statement, and how to reconcile the differences between accountants' and actuaries' approaches to pensions. Current standards assume that accounting estimates are independent of actuarial assumptions, and yet require a direct comparison of the accounting liability with the pension plan assets, when in fact they are incompatible measures based on differing assumptions and differing methodologies. As well, accounting has been complicit in managers' wishes to hide the volatility inherent in a pension plan investment strategy that focuses on higher-risk equities to fund estimated monetary liabilities that have been discounted at low-risk interest rates. Drawing on studies and research done largely in Europe, this paper attempts to consolidate some of the current thinking on the topic and to propose some preferred approaches to dealing with the problems of pension accounting. [source] Modelling & Controlling Monetary and Economic Identities with Constrained State Space ModelsINTERNATIONAL STATISTICAL REVIEW, Issue 2 2007Gurupdesh S. Pandher Summary The paper presents a method for modelling and controlling time series with identity structures. The approach is presented in the context of monetary targeting where the monetary identity (e.g. reserve money equals net foreign assets plus domestic credit) is modelled using a constrained state space model and next-period changes in domestic credit (policy variable) are estimated to reach the target level of reserve money. The constrained modelling ensures that aggregation and identity relations among items are dynamically satisfied during estimation, leading to more accurate forecasting and targeting. Applications to Germany, UK and USA show that the constrained state space model provides significant improvements in targeting and forecasting performance over the AR(1) benchmark and the unconstrained model. Reduction in the mean square error of targeting over AR(1) is in the range of 76,95% for the three countries while the gain in targeting efficiency over unconstrained modelling is between 21% and 55%. Beyond monetary targeting, the method has wide application to the dynamic modelling and control of economic and financial time series with identity and aggregation constraints (e.g. balance of payment, national income, purchasing power parity, company balance sheet). Résumé L'article présente une méthode de modélisation et de contrôle des séries temporelles avec des structures d'identité. L'approche est présentée dans le contexte de ciblage monétaire où l'identité monétaire (c. à d. monnaie de réserve égale avoirs étrangers plus crédit intérieur) est modélisée en utilisant un modèle spatial sous contrainte et où les variations du crédit intérieur à la période suivante (variable de politique) sont estimés pour atteindre le niveau visé de monnaie de réserve. La modélisation sous contrainte assure que les relations d'agrégation et d'identité entre items sont satisfaites en dynamique dans l'estimation, ce qui conduit à des prévisions et ciblages plus précis. L'application à l'Allemagne, le Royaume-Uni et les USA montrent que le modèle contraint apporte des améliorations importantes dans la performance de ciblage et de prévision par rapport à l'étalonnage auto-régressif (1) et au modèle sans contrainte. La réduction d'erreur du moindre carré par rapport à l'AR est comprise entre 76 et 95% pour les trois pays tandis que le gain en efficacité de ciblage sur le modèle sans contrainte se situe entre 21 et 55%. Par delà le ciblage monétaire, la méthode a une large application à la modélisation dynamique et au contrôle des séries temporelles économiques et financières avec des contraintes d'identité et d'agrégation (par ex. la balance des paiements, le revenu national, la parité de pouvoir d'achat, le bilan d'une compagnie). [source] The Allowance for Uncollectible Accounts, Conservatism, and Earnings ManagementJOURNAL OF ACCOUNTING RESEARCH, Issue 3 2010SCOTT B. JACKSON ABSTRACT We study the interrelation between conservatism and earnings management by examining the allowance for uncollectible accounts and its income statement counterpart, bad debt expense. We find that the allowance is conservative and that it has become more conservative over time. Conservatism may, however, facilitate earnings management. We find that firms manage bad debt expense downward (and even record,income-increasing,bad debt expense) to meet or beat analysts' earnings forecasts and that conservatism accentuates the extent to which firms manage bad debt expense. Further, we find that firms manage bad debt expense downward by drawing down previously recorded over-accruals of bad debt expense that have accumulated on the balance sheet. An implication of our study is that tighter limits on the amount by which firms are permitted to understate net assets may reduce their ability to manage earnings. [source] How To Choose a Capital Structure: Navigating the Debt-Equity DecisionJOURNAL OF APPLIED CORPORATE FINANCE, Issue 1 2005Anil Shivdasani In corporate offices as well as the classroom, there continues to be significant debate about the costs and benefits of debt financing. There is also considerable variation in corporate credit ratings, even among companies as large and successful as those that make up the S&P 500. Many companies have been reassessing how they manage their balance sheet and their rating agency relationships; and with the market's generally favorable response to recapitalizations and dividend increases, such financing issues are likely to receive even more attention. Underlying the diversity of corporate credit ratings is widespread disagreement about the "right" credit rating,a matter that is complicated by the fact that the cost of debt varies widely among companies with the same rating. Although credit ratings are clearly tied to measures of indebtedness such as leverage and coverage ratios, the most important factor in most industries is a company's size. For many mid-sized companies, an investment-grade rating can be attained only by making a large, equity-financed acquisition,or by making minimal use of debt. In this sense, the corporate choice of credit rating can be as much a strategic issue as a financial decision. Maintaining the right amount of financial fl exibility is a key consideration when determining the right credit rating for a given company (although what management views as value-preserving flexibility may be viewed by the market as value-reducing financial "slack"). A BBB rating will accommodate considerably more leverage (30,60%) in companies with fairly stable cash flows and limited investment requirements than in more cyclical or growth-oriented companies (10,20%). When contemplating taking on more leverage, companies should examine all major operating risks and view their capital structure in the context of an enterprisewide risk management framework. [source] Residual income, non-earnings information, and information contentJOURNAL OF FORECASTING, Issue 6 2009Ruey S. Tsay Abstract We extend Ohlson's (1995) model and examine the relationship between returns and residual income that incorporate analysts' earnings forecasts and other non-earnings information variables in the balance sheet, namely default probability and agency cost of a debt covenant contract. We further divide the sample based on bankruptcy (agency) costs, earnings components and growth opportunities of a firm to explore how these factors affect the returns,residual income link. We find that the relative predictive ability for contemporaneous stock price by considering other earnings and non-earnings information is better than that of models without non-earnings information. If the bankruptcy (agency) cost of a firm is higher, its information role in the firm's equity valuation becomes more important and the accuracy of price prediction is therefore higher. As for non-earnings information, if bankruptcy (agency) cost is lower, the information role becomes more relevant, and the earnings response coefficient is hence higher. Moreover, the decomposition of unexpected residual income into permanent and transitory components induces more information than that of the unexpected residual income alone. The permanent component has a larger impact than the transitory component in explaining abnormal returns. The market and industry properties and growth opportunity also have incremental explanatory power in valuation. Copyright © 2008 John Wiley & Sons, Ltd. [source] Choice of Accounting Method for Valuation of Investment Securities: Evidence from Hong Kong FirmsJOURNAL OF INTERNATIONAL FINANCIAL MANAGEMENT & ACCOUNTING, Issue 2 2003Bikki Jaggi This study examines whether Hong Kong managers choose "benchmark" or "alternative" valuation method for investment securities, after the Hong Kong SSAP 24 became effective starting with fiscal-year ending December 31, 1999. Tests are conducted on a sample of 292 firms, out of which 155 Hong Kong firms reported unrealized gains and losses and 128 firms that did not report holding gains/losses, but reported investment securities. The findings indicate that firms with strong relative performance, i.e. current year's EPS higher than that of the last year, chose the alternative valuation method when the investment securities had holding gains and recognized the unrealized holding gains in the equity section of the balance sheet. This finding is consistent with the Cookie Jar hypothesis because these holding gains would be used in the income statement in future periods, when needed. With regard to firms with strong relative performance and holding losses, the findings indicate that the benchmark valuation was used. The losses were reported in the income statement to the extent that they did not reduce the EPS below that of the last year. This finding is consistent with the Income Smoothing Hypothesis, because the use of benchmark valuation reduced EPS of the current year to bring it in line with that of the last year. Evidence on firms with weak economic performance and holding gains or losses provided weak support to the Income Smoothing Hypothesis and Big Bath Hypothesis. Additionally, the results indicate that the firms with high debt-equity ratio preferred the benchmark method and recorded securities at cost. This treatment provided managers with an opportunity to liquidate or reclassify the securities in future periods and use the accrued gains, when needed. The findings are inconclusive with regard to the impact of bonus plan on the choice of valuation method. [source] Risk Management with Duration: Potential and LimitationsCANADIAN JOURNAL OF ADMINISTRATIVE SCIENCES, Issue 2 2000Gerald O. Bierwag This paper demonstrates the applicability of duration as a risk management tool for government organizations. Drawing on a real case, we present methodologies for quantifying (a) the durations of real assets on a government's balance sheet, and (b) the durations of the financial assets represented by shares in state-owned enterprises (SOEs). In the area of real physical assets on the balance sheet we focus on the highway system and on real estate owned by the government. The methodology for measuring durations of SOEs focuses primarily on an electrical utility. Our main conclusion is that it is feasible to derive excellent practical measures of the real durations of physical assets on a government's balance sheet. Far from being academic curiosities,such durations can be estimated with a fair degree of accuracy in practice. The paper also indicates some of the potential limitations of duration analysis as a risk management tool for such organizations. Résumé En tant que grand succès de la finance académique, l'analyse de durée profite d'une application étendue de la part des praticiens de différents millieux du secteur privé. Cet article démontre la possibilité d'utiliser les durées comme outil de gestion du risque dans les organisations gouvernementales. En se basant sur un cas réel, nous présentons les méthodes pour quantifier (1) les durées des valeurs réelles d'un bilan gouvernemental et (2) les durées des valeurs financières représentées par des parts dans des sociétés d'état. Pour ce qui est des valeurs physiques réelles du bilan, nous nous arr,tons sur le système autoroutier et sur les biens immobiliers possédés par le gouvernement. La méthode de mesure des durées des sociétés d'état focalise sur une compagnie de service électrique. Notre conclusion principale est qu'il est possible de tirer d'excellentes mesures pratiques des durées réelles des valeurs physiques du bilan financier d'un gouvernement. Loin d',tre de pures curiosités académiques, de telles durées peuvent ,tre, en pratique, estimées avec un degré raisonnable de précision. L'article mentionne de plus certaines limites potentielles de l'analyse de durée comme outil de gestion de risque pour de telles organisations. [source] RECENT TRENDS IN AUSTRALIAN BANKINGECONOMIC PAPERS: A JOURNAL OF APPLIED ECONOMICS AND POLICY, Issue S1 2006KEITH HALL This paper discusses the performance of Australian banks over the past decade, focusing on the forces that have shaped bank strategies and outcomes. The robust Australian economy and associated demand for credit, particularly from the household sector, have been significant drivers of bank success. Intensifying competition in lending and deposits has also played a role, manifesting itself largely as price pressure, but also spurring product innovation and the easing of lending standards. While the combination of these forces has allowed bank balance sheets to grow rapidly, the sector has remained well capitalised and has low levels of non-performing assets. [source] Testing for Balance Sheet Effects in Emerging Markets: A Non-Crisis Setting,INTERNATIONAL FINANCE, Issue 2 2010Uluc Aysun The literature has established that emerging market economies are better insulated from large external shocks during a financial crisis when they adopt a flexible exchange rate regime. Looking at the strength of firms' balance sheets, this paper shows that the opposite holds true in non-crisis periods. The reason is that balance sheets and thus spending decisions are less affected by external shocks under fixed regimes. This result is obtained through several theoretical and empirical methodologies that are useful for identifying balance sheet effects in a non-crisis setting. Simulations reveal a larger (smaller) output response under flexible regimes when these effects are included (excluded). Although the transmission of foreign interest rate shocks to domestic interest rates is stronger under fixed regimes, it appears the limited effects on balance sheets generate a more muted output response. [source] Real estate and corporate valuation: an asset pricing perspectiveMANAGERIAL AND DECISION ECONOMICS, Issue 7 2001Liow Kim Hiang Property is a significant asset in the balance sheets of some Singapore industrial/commerce firms and hotel corporations. In this research, we take on the task of examining the relationship between real estate and stock market valuation of these business firms from an asset pricing perspective. Specifically, the real estate sensitivity of ,property-intensive', non-real estate stocks is investigated in both a three-index (market, sector and property) of stock returns and in an arbitrage pricing theory (APT) framework. The APT model is further recast as a multivariate non-linear regression model with across-equation restrictions. Using weekly returns on ,property-intensive' stocks in the period 1989,1998 and three shorter-sample periods, iterated non-linear seemingly regression techniques (ITNSUR) are employed to obtain joint estimates of stock sensitivities and their associated APT risk ,prices'. The ,real estate' sensitivity is found to be systematic and priced in the APT sense of corporations being paid an ex ante premium for bearing property market risk in investing and owning properties in two of the three sample periods (1989,1991, 1992,1994). The empirical results provide some support that property is a factor in corporate valuation, and is broadly consistent with the efficient markets hypothesis. The implications for portfolio and corporate management are examined. Copyright © 2001 John Wiley & Sons, Ltd. [source] Meeting Requirements for Vitamin ANUTRITION REVIEWS, Issue 11 2000Clive E. West Ph.D., D.Sc. When the intake of foods or pharmaceutical preparations containing sufficient nutrients of adequate bioavailability are consumed, nutrient requirements are met and optimal nutritional status is maintained. Recent studies have shown that the basis for describing vitamin A activity of carotenoids overestimates the bioavailability of provitamin A carotenoids and their bioconversion to retinol (vitamin A). It is therefore proposed that instead of 6 pg from a mixed diet, 21 ,g ,-carotene are required to provide 1 ,g of retinol or 1 RE (retinol equivalent) of vitamin A. Based on this assumption and on data from food balance sheets, estimates of daily per capita vitamin A intake expressed in RE in Africa, South America, and Asia are reduced from 895, 599, and 667, respectively, to 371, 372, and 258, respectively. Such intakes are well below the recommended daily intake of 600 RE for adult males. A new combination of approaches will therefore have to be used to combat vitamin A deficiency rather than that used up until now. [source] Measuring profitability impacts of information technology: Use of risk adjusted measuresPROCEEDINGS OF THE AMERICAN SOCIETY FOR INFORMATION SCIENCE & TECHNOLOGY (ELECTRONIC), Issue 1 2003Anil Singh This study focuses on understanding how investments in information technology are reflected in the income statements and balance sheets of firms. Today, little doubt exists that information technology is being used by organizations in a wide variety of settings and ways and that information technology is critical for the smooth operation of many organizations. Further, a strong body of research exists showing that information technology usage is positively correlated with organizational productivity. However, empirical evidence of information technology contributing to corporate profitability has not been forthcoming. Although the income statements, balance sheets, and cash-flow statements all together summarize the financial structure, health and profitability of firms but still much doubt and confusion exists over the impacts of information technology usage on a firm's "hard" numbers such as revenues, cost, profit margins, or financial ratios and structure. So far, only a few studies have found a significant positive relationship between information technology and some aspect of corporate profitability. The present research argues that the inability of earlier studies to identify the relationship between information technology investments and bottom-line performance is in part because of methodological reasons. This study first defines and develops risk-adjusted measures of corporate profitability. Then, it examines the income statements and balance sheets of more than 500 firms that are leading users of information technology for the period 1988-98. Finally, the study shows that the relationship between information technology investments and corporate profitability is much better explained by using risk-adjusted measures of corporate profitability than using the same measures of corporate profitability but unadjusted for risk. [source] PARTIAL DOLLARIZATION, EXCHANGE RATES, AND FIRM INVESTMENT IN PARAGUAYTHE DEVELOPING ECONOMIES, Issue 1 2009John SERIEUX E44; F41; G18; O16 Between 1989 and 1993 the government of Paraguay removed most restriction on financial transactions in domestic and foreign currency. The resulting financial deepening also involved partial dollarization. This investigation sought to determine whether partial dollarization led to negative balance sheet effects (in the form of reduced access to investment credit due to depreciation-induced reduction in firms' net worth as a result of currency mismatches on their balance sheets) and, therefore, to investment contractions, at the firm level, in the face of real currency depreciations. Support was found for that thesis. However, there was also evidence that banks expanded credit more rapidly in the face of currency depreciations. These apparent contradictory movements in credit and investment were shown to be a result of the absence of any clear causal link (in a Granger sense) between bank credit to the private sector and private investment in Paraguay. [source] Securitisation and Financial Stability,THE ECONOMIC JOURNAL, Issue 536 2009Hyun Song Shin A widespread opinion before the credit crisis of 2007/8 was that securitisation enhances financial stability by dispersing credit risk. After the credit crisis, securitisation was blamed for allowing the ,hot potato' of bad loans to be passed to unsuspecting investors. Both views miss the endogeneity of credit supply. Securitisation enables credit expansion through higher leverage of the financial system as a whole. Securitisation by itself may not enhance financial stability if the imperative to expand assets drives down lending standards. The ,hot potato' of bad loans sits in the financial system on the balance sheets of large banks rather than being sold on to final investors, since the aim of financial intermediaries is to expand lending in order to utilise slack in balance sheet capacity. [source] BUSINESS FAILURES AND MACROECONOMIC FACTORS IN THE UKBULLETIN OF ECONOMIC RESEARCH, Issue 1 2009Jia Liu G33; E42; P11 ABSTRACT We examine the interactions between business failures and macroeconomic aggregates, and specifically the accounts of policy-induced changes in the macroeconomy for the observed fluctuations of UK business failures in the period 1966,2003 using the vector error-correction model (VECM). The results demonstrate that macroeconomic aggregates, i.e., interest rate, credit, profits, inflation and business births, exert differential impacts on business failures both in the short run and in the long run. The study reveals that structural changes in the financial and real sectors during the examined period have made an impact on the way in which the macroeconomy affects business failures. In particular, business failures are increasingly reacting to monetary policy changes in the post-1980 period. Furthermore, the shocks to business failures can generate large fluctuations in macroeconomic aggregates, suggesting the importance of corporate balance sheets in financial stability and economic growth. The paper's findings carry policy implications that are related to the survival of firms in distress and finance-driven business cycles. [source] Sharing China's Bank Restructuring BillCHINA AND WORLD ECONOMY, Issue 3 2006Guonan Ma G21; G28; O53; P34 Abstract This paper addresses the questions related to the cost of China's bank restructuring and how it has been financed. We first propose a framework for recognizing losses. Then, we examine the recent major moves by the Chinese Government to repair the country's bank balance sheets. Finally, we explore the implications of the Chinese Government's methods of funding bank restructuring. We find that the Chinese Government has been decisive in confronting the costly task of bank restructuring. So far, Chinese taxpayers have paid most of the bill for bank restructuring. (Edited by Xiaoming Feng) [source] | |||||||||||||||||||||||||||||||